Underwriting: a brief introduction
By Allstate Benefits
Last updated: February 2025
Understanding the intricacies of insurance coverage is no easy task. It involves a complex web of factors determining who, what, where and how much. Determining age limits for coverage, calculating administrative costs to deliver meaningful protection, and aligning coverages with state-specific exclusions and limitations are just a few of the factors that must all be considered when building insurance plan designs.
At the heart of this multi-faceted system lies the underwriting process. With underwriting expertise, carriers are able to strike a balance between protecting people and property with competitive rates while maintaining the financial stability of the insuring company.
Underwriting defined
First, let’s define underwriting and then we’ll look at some factors and terms that underwriters use to help define terms of coverage. In short, underwriting is the process that insurance companies use to evaluate the risk of insuring an individual or a group of people.
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“Working together with accuracy, transparent accountability and thoughtful risk analysis to exceed our customers’ needs and expectations.” Underwriting |
Coverage factors
Here are the essential factors an underwriter will analyze in issuing coverage:
- Eligibility – defines which people within a group may apply for coverage. With supplemental insurance, this may include factors like part-time or full-time working status, age, relationship to the primary insured person, and more.
- Risk assessment – determines if an individual or group presents acceptable conditions for issuing coverage.
- Premium/rate pricing – defines the premium rates that each individual or group will pay for coverage.
- Policy issuance – determines the parameters for issuing coverage. This includes coverage and benefit amounts, length of coverage, exclusions and limitations, and much more.
By combining these factors to develop plan designs, underwriters achieve two main outcomes: a coverage system where people pay similar rates for the same types of coverage from various insurance providers, and a favorable profit-loss ratio for the insurer.
Underwriting terms
The terms below apply to some supplemental insurance options. Underwriting language can have different meanings with different types of insurance products, or in different organizations.
Evidence of insurability (EOI) or proof of good health (POGH)
EOI and POGH are statements or proof of a person’s medical history. These statements help underwriters determine whether to issue coverage to an individual.
Qualifying life event (QLE)
Also known as a life event change. Examples of a QLE are marriage, death of a spouse, legal separation, birth or adoption of a child, or residence or work status changes. With a QLE, a covered person is allowed to make changes to their coverage and benefits. They may increase/decrease coverage amounts or add dependents.
Guaranteed issue (GI)
GI is the amount of insurance that can be issued to a person without them having to answer health questions and declare their employment status.
Contingent guaranteed issue (CGI)
CGI is when all participants who are enrolling in coverage must answer some Evidence of Insurability questions.
Simplified issue (SI)
SI requires that all eligible coverage applicants provide full Evidence of Insurability.
Underwriters not only look at factors like age, employment status, and health histories to build plan designs and determine coverage issuance; they also study market trends, consumer behavior, and technological developments that influence enrollments and insurance administrative practices. Put simply, without the diligence of underwriters, insurance carriers would be hard-pressed to issue meaningful coverage while maintaining their company’s financial stability.
Allstate Benefits underwriting offers
Allstate Benefits offers an array of underwriting options for businesses of all sizes, from a few employees to 10,000 or more. Our underwriting team helps deliver the Good Hands® promise to thousands of companies and millions of families every year. If you are a business owner or benefits administrator looking to offer your employees added coverage to help protect their finances contact us to learn more about the underwriting offers that are available to you.